OpinionPolitics

Henry Clay and His American System

Part 4 of 8 of a Series on the Morrill Tariff

Foreshadows of the Morrill Tariff

In 1816, many prominent Southerners and New Englanders felt that they would benefit enough from the nation’s overall growth from increased industrialization to compensate for their immediate disadvantage from higher tariffs.

Henry Clay, Kentucky Whig. Wikimedia photo.

Even James Madison, Thomas Jefferson, and John C. Calhoun approved of the compromise. This compromise, however, bore the seeds of Northern addiction to protectionist tariffs. First advocated by Alexander Hamilton and his Federalist Party, high tariffs reduced foreign competition and allowed American manufacturers to raise their prices. The resulting increases in profitability (at consumer expense) raised their appetite for still more. In less than a decade, the continuous Northern cry for protectionist policies would give birth to Kentucky Representative Henry Clay’s “American System.”

Clay, like Hamilton, favored protective tariffs, industrial subsidies, and a centralized national bank. These policies were later adopted by Clay’s Whig Party and then the new Republican Party in 1856. This also led to the growth of legislative logrolling (I’ll help you roll your log if you help me roll my log.). Logrolling increased legislative support for bills by expanding them to include mutual agreements beyond their central purpose. In the end, the 1816 Tariff had some legislative support in every state except North Carolina and Delaware.

Of course, the moral problem with all this is that it amounts to ganging up to pass legislation that will benefit the most powerful interest groups at the expense of the overall national interest and less powerful commercial or regional interests. As a rule of thumb for the era, tariffs of 15 to 20 percent were seen as tolerable revenue tariffs, while tariffs of 20 percent or more were seen as protectionism that led to big profits for some and economic harm to others.

The 1816 Tariff turned out to be immensely profitable to protected industries. They were also conveniently blind to the consequent suffering of other regions and commercial interests. Rather than being satisfied with their profitable windfall, however, they began to lobby for more. When hard economic times came, they looked to government legislation and regulation rather than innovation to sustain their prosperity.

On March 30, 1824, Henry Clay, recently elected Speaker of the House, stood before his colleagues, seeking support for a new tariff.

Are we doomed to behold our industry languish and decay yet more and more? But there is a remedy, and that remedy consists in modifying our foreign policy and in adopting a genuine American System…the only means which the wisdom of nations has yet discovered to be effectual: by adequate protection against the otherwise overwhelming influence of foreigners.”28

The Tariff of 1824 was clearly protectionist legislation, substantially increasing tariff rates to an average dutiable rate of about 35 percent to maximize Northern-manufacturing profits regardless of its damaging economic impact on Southern states. The impact on Western states was less damaging, and many Western Congressmen were won over by logrolling provisions. Its emphasis included higher tariffs on iron products, wool and cotton textiles, and some agricultural goods. The legislation was essentially a political contest between Henry Clay’s high-tariff “American System” and low-tariff Southern free trade. Southern prosperity depended on low cost imports from Britain and open foreign markets for its cotton produce.29

Clay’s 1824 Tariff carried the U.S. house by 107 to 102 votes, with a narrow margin of only five votes of 209 cast. Only three of 67 Southern representatives voted for it. It carried by a vote of 25 to 21 in the Senate, with the support of only two of 16 Southern Senators. The South Carolina, Georgia, North Carolina, Alabama, and Virginia state legislatures condemned the Act as unconstitutional. The South Carolina Legislature also condemned Clay’s “American System” and called it “a system of robbery and plunderthatmade one section tributary to another.30 Thus began 37 years of heated political conflict between North and South that would eventually provoke the seven major cotton-producing states to secede. It was a strong signal to Southern leaders that Northern political dominance meant Southern impoverishment and exploitation. Furthermore, Southern leaders observed a growing Northern tendency to ignore the Constitution and Southern rights whenever it was to Northern economic and political advantage. The South began to see the North as driven by insatiable sectional greed and blind disregard for Constitutional limits and economic injuries suffered by the South. Now seeing the extravagant abuse of protective tariffs and their destructive impact on the Southern economy, South Carolina’s John C. Calhoun became a strong spokesman for tariff reform and Southern rights.

British author John Spence lamented the triumph of protectionism in the sectionalist 1824 tariff with a precise statement of its moral deformity:

The idea of a moderate system, generally beneficial to the industry of the country, without grievous hardship to any particular class, became altered into the reality of corrupt political bargains between special interests, to impose heavy taxation on all others for their own profit.”31

Church of Ireland Bishop Richard Mant (1778-1848) articulated the nature of this terrible numbing of the conscience and stealthy advance of greed:

There is not a vice which more effectually contracts and deadens the feelings, which more completely makes a man’s affections center in himself, and excludes all others from partaking in them, than the desire of accumulating possessions. When the desire has once gotten hold of the heart, it shuts out all other considerations, but such as may promote its views. In its zeal for the attainment of its end, it is not delicate in the choice of means. As it closes the heart, so also it clouds the understanding. It cannot discern between right and wrong; it takes evil for good; it calls darkness light, and light darkness. Beware then of the beginnings of covetousness for you know not where it will end.”32

In the case of the unjust tariff laws stretching from 1824 to 1861, it led to Southern secession, Northern aggression to prevent that secession, and calamitous war.

In 1828, another tariff bill was passed, which was so overbearing and unjust that it is known in history as the Tariff of Abominations. The average dutiable rate was raised to an average of approximately 50 percent, the highest in history to that point. The original impetus was that Northern textile manufacturers believed they needed greater protection, but the bill became a comprehensive bribery scheme to win the votes of Middle and Western states for the party of John Quincy Adams in the 1828 election. Duties on many raw materials were added, which had a mixed effect on New England, since they imported many raw materials for their industries. Hemp from Kentucky and lead from Missouri were also added. The hemp addition was undoubtedly due to Henry Clay’s powerful influence, but both the Kentucky and Missouri additions were necessary logrolling deals to grease passage through the House. In addition to extensive logrolling, another questionable device for passage was that many tariffs were a mixture of both specific and ad valorem rates, disguising what in effect were very high rates. In general, the 1828 tariff was both higher and broader.

South Carolina Representative George McDuffie made some memorable and prophetic remarks to the House during the 1828 debate:

If the Union of these states shall ever be severed, and their liberties subverted, the historian who records those disasters will have to ascribe them to measures of this description. I do sincerely believe that neither this government, nor any free government, can exist for a quarter of a century under such a system of legislation. Its inevitable tendency is to corrupt, not only the public functionaries, but all those portions of the Union, and classes of society, who have an interest, real or imaginary, in the bounties it provides, by taxing other nations and other classes. It brings ambition, and avarice, and wealth, into a combination it is fearful to contemplate, because it is impossible to resist.”33

Yet the 1828 Tariff of Abominations passed the House 105 to 94. Its greatest region of resistance was the deep South, where the vote was 50 to 3 against it. Logrolling promises on sugarcane imports probably influenced the three favorable votes. New England representatives voted against it 23 to 16, but the combined Mid-Atlantic and Western states plus Kentucky and Tennessee supported it by a vote of 86 to 21. The bill finally passed the Senate 26 to 21, with the only Southern votes being two from Kentucky, one from Tennessee, and one from Louisiana.34

Senator Thomas Hart Benton of Missouri explained the injustice felt by Southerners: “The South believed itself impoverished to enrich the North.” Benton further pointed out the appalling burden the Federal Government had placed on Southern States: “…its double action of levying revenue upon the industry of one section of the Union and expending it in another.”35

Tariff historian Frank W. Taussig, writing in 1888, described passage of the 1828 Tariff in censorious terms:

The whole scheme was a characteristic product of the politicians who were then becoming prominent as leaders of the Democracy, men of a type very different from the statesmen of the preceding generation.”

Its passage, however, resulted in the defeat of John Quincy Adams in the 1828 presidential election by Andrew Jackson of Tennessee, who opposed the Tariff. His Vice President was John C. Calhoun of South Carolina, a brilliant intellectual, and one of the most vehement opponents of protective tariffs in the antebellum era.

___________________________________

Abbreviated Notes Part 4 (FN) 28-36

FN28 Andrew Glass, “Clay Advocates High U.S. Tariff Wall, March 30, 1824,” Politico.

Last accessed August 9, 2011.

FN29 Taussig, pp. 73-79.

FN30a. Mark Thornton and Robert B. Ekelund Jr; Tariffs, Blockades, and Inflation: The

Economics of the Civil War, 2004, p. 20.

b. Benjamin Franklin Grady, pp. 178-181.

c. Thomas J. DiLorenzo, “The Unconstitutional Tax on American

Exports,”LewRockwell.com, January 15, 2004.

FN31 Spence p. 171

FN32 Attributed to Thomas Manton, English Puritan (1620-1677)

and Richard Mant (1776- 1848), English churchman and writer.

FN33 Spence pp. 172-3

FN34 a. Tariff of 1828. Wikipedia

b. Taussig, p. 100

FN35 Spence, p. 178

FN36 Taussig, p. 95

 

 

 

 

Tags
Show More

Related Articles

Close